POST- COVID PROFITABILITY SCENARIO FOR A LEASING COMPANY "A Case of Optimus by Hertz PVT LIMITED.

Abstract

The leasing industry, especially the automotive sector, has grown due to rising inflation, banks' competitive lending policies, and the lack of public transport for the general public. In particular, pre-pandemic and post-pandemic events posed both threats and opportunities to this sector. To analyze the post-covid profitability of leasing industry we have chosen Optimus Limited licensee of Hertz (Pvt) Ltd.Hertz is Pakistan's leading car rental and leasing company with five rental locations in three cities. This case study is based on one of the major client of Optimus limited whose identity must be kept confidential. The primary data set for this study consists of approximately 144 vehicles. For the particular client, we shortlisted 3 cars: Toyota, Mercedes and Kia Sportage. According to the new government policy, no individual will be able to obtain a car loan worth more than Rs. 3 million. In response to this restriction, a major client ofOptimus chose to modify the terms of the existing lease agreement. Client A opted to exercise the buyback option at the completion ofthe lease after 20 months. In order to come to an agreement with Client A, Optimus Limited must perform profitability scenario analysis to determine the revision ofleasing payments, maintenance costs, and residual values. Additionally, all ofthis must be achieved without risking the company's profitability or losing Client A .The scenarios were created using Microsoft Excel, in which we precisely used Goal Seek, PivotTable and other various formulas.